New Hospital Reimbursement Policies During COVID-19 Outbreak Will Help, But Hospitals Must Have A Clear Protocol To Avoid Denials

Note: This article was originally written on April 8, 2020. It was revised on April 15, 2020 to reflect new developments. The situation continues to change by the day. As always, our advice is to keep checking the websites of state and federal agencies as well as major payers.

Hospitals inundated with patients seeking testing and treatment for COVID-19 are also bracing for financial challenges. Legislation and regulatory rulings at the federal and state level could help to calm the waters, but hospitals will need to proceed carefully and intentionally to make sure that they don’t experience a wave of denials after the virus recedes. Most importantly, hospitals should try to maintain their normal billing, coding, and documentation practices as much as possible under the extraordinary circumstances.

1. Background: New policies aim to offset financial impact of declining revenue and rising costs

The COVID-19 pandemic sweeping across the United States threatens hospitals’ bottom lines on multiple fronts, as reported by the Healthcare Financial Management Association (HFMA). First, as hospitals have been forced to cancel up to 75 percent of their elective procedures, they have lost a major source of revenue, with Moody’s reporting that “postponed services alone are likely to reduce hospital revenue by 25 percent to 40 percent a month on average.” At the same time, hospitals are experiencing price spikes for medical supplies and equipment needed to treat COVID-19 as demand skyrockets.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, recently passed by Congress and signed into law by the president, includes a provision that will increase Medicare payments for COVID-19 cases by 20%. Even with this change, however, one analysis projects that hospital may lose $1,200 on average for each COVID-19 case. Fortunately for hospitals, the CARES Act includes other provisions designed to make up for the budgetary shock of COVID-19, including advance payments from Medicare, a temporary suspension of the Medicare sequester and the Medicaid Disproportionate Share Hospital (DHS) cuts, and, most significantly, a $100 billion fund to compensate providers for lost revenue or increased costs due to COVID-19.

As of April 10, CMS has distributed the first installment of $30 billion in relief funding to hospitals in proportion to their share of fee-for-service Medicare funding, with subsequent rounds to be allocated to hospitals that face greater financial challenges due to the impact of COVID-19 in their area, lower shares of Medicare payment, and higher rates of Medicaid and uninsured patients. Separately, under the CARES Act’s Accelerated and Advance Payment Program, CMS had delivered $51 billion to hospitals and other providers as of April 9. Meanwhile, several health plans, including UnitedHealthcare and CareFirst BlueCross BlueShield, have joined CMS in offering accelerated or advance payments to hospitals.

In addition to the legislative changes embodied in the CARES Act, the Centers for Medicare and Medicaid Services (CMS) have announced a slew of regulatory changes intended to help hospitals boost their capacity in order to accommodate the surge of patients. Hospitals may now transfer patients to approved non-hospital spaces, such as dormitories and hotels, and bill for inpatient care in these alternative settings. Some hospitals have explored partnerships to reopen previously closed hospitals. Hospitals may also partner with ambulatory surgery centers (ASCs) and freestanding emergency departments (EDs) to take their patients and bill as part of the hospital. Finally, hospitals are able to be paid for telehealth in a broader range of settings than was previously permitted.

States have also moved to offer financial assistance to hospitals during the crisis. In Maryland, where hospital rates for all payers are regulated by the state, the Health Services Cost Review Commission (HSCRC), has allowed hospitals to temporarily raise their rates.

2. Potential Problems: Unanswered questions about how to bill, code, and document under the new policies

All of the policies described above extend hospitals a lifeline to help them stay afloat during the storm. However, there are several risks associated with these new options that hospitals should consider before diving in headfirst.

First, how will hospitals bill when they provide care in outpatient facilities like ASCs and freestanding EDs or in temporary medical beds in hotels and dorm rooms? CMS says that these temporary surge beds can be treated as part of the hospital, but what does that mean? Will they bill under the hospital’s Tax Identification Number (TIN) and National Provider Identifier (NPI)? What about the Medicare PTAN or the Medicaid Provider Number? What about revenue and procedure codes – will the hospital use the same codes they would if the patient were at the main campus? Even the name and address listed on the claim are potential landmines – does the hospital use its own name billing address, or the name and address of the location where services were actually rendered? Sorting this out is essential in order to prevent claim denials for invalid provider information or site of service.

A related concern is documentation. Many of the largest hospitals are now using electronic health record (HER) systems, with Epic and Cerner the industry leaders. Implementation of EHRs, along with the widespread use of scribes and efforts by doctors themselves, has contributed to a pronounced improvement in the quality of documentation in recent years. This can reduce the rate of denials, by preventing denials due to incorrect coding, and raise the denial overturn rate on appeal, by ensuring that the documentation accurately reflects the medical necessity of the services provided. Will providers at overflow locations like freestanding EDs, ASCs, hotels, and dorm rooms have the same access to the hospital’s EHR, or will they be forced to revert to old-fashioned paper charts, as hospitals sometimes do during EHR downtime? Also, will scribes be available in the same numbers at the overflow locations?

Finally, how will hospitals calculate its lost revenue and increased expenses due to COVID-19 in order to apply for a share of federal funding under the CARES Act? Hospitals will have to have a way of tracking the number and expense of COVID-19 cases. For that, it will be vital to appropriately code all cases of COVID-19 to ensure that the claims are reimbursed at the appropriate rate. In addition, hospitals should follow guidance from the National Uniform Billing Committee (NUBC) and use the “DR” condition code to flag claims for care related to COVID-19.

3. Recommended Actions: Adhere to standard procedures to the greatest extent possible

As hospitals contemplate adjusting their protocols in response to newly enacted laws and regulations, they should consult with their legal teams to determine the best path forward. As much as possible, hospitals should seek to bill, code, and document services provided at overflow locations as if they were provided at the hospital – including, if legally permissible, using the hospital’s tax ID, NPI, PTAN, Medicaid provider number, and billing address to ensure that the claim is correctly processed as a facility claim. In addition, the hospital should use the same procedure codes and charges for services provided at overflow locations as they would if the encounter took place at the hospital. Finally, in order to maintain the quality and consistency of documentation, hospitals should work with their EHR service provider to allow offsite access, as Epic has done with field hospitals and alternate care locations in Illinois, New York, and New Jersey, and try to make scribes available at all hospital-affiliated locations.

Some claim denials are inevitable during this time of rapid change, upheaval, and confusion. Nonetheless, these denials can be appealed after the fact. If hospitals develop a comprehensive policy for billing, coding, and documentation in this unprecedented situation, they will have a better chance of winning on appeal and receiving the fair reimbursement that they have been promised by the states and the federal government.